Left: E.T. Meredith III -- Chairman of the Executive Committee of the Board of Directors

Right: William T. Kerr -- Chairman and Chief Executive Officer

To Our Shareholders:
Fiscal 1998 was another year of record performance. Our earnings per share from continuing operations; revenues; and earnings before interest, taxes, depreciation and amortization (EBITDA) reached levels unsurpassed at any other time in Meredith Corporation's history.

Driven by outstanding publishing and broadcasting operating performances, diluted earnings per share from continuing operations were $1.46, up 20 percent from $1.22 in fiscal 1997.

For the first time ever, we achieved revenues in excess of $1 billion. This compares to $855.2 million last year -- an 18 percent increase. We reached this milestone while carefully managing costs, resulting in a substantial increase in our operating profit margin. It grew from 13.4 percent last year to 15.1 percent in fiscal 1998.

Our strong EBITDA performance also reflected our outstanding year. Fiscal 1998 EBITDA grew 38 percent to $189.3 million from $137.7 million.

Return on equity (ROE) grew to 21.1 percent in fiscal 1998 from 20.7 percent in fiscal 1997. To better appreciate the significance of this performance, recall that in fiscal 1994 our ROE was 8.9 percent.

Performance Drivers

We Know Our Customers

These results were driven by a number of factors. First, as reflected on the cover of this year's annual report, we know our publishing and broadcasting customers, we understand their needs and we provide them with service that goes far beyond their expectations.

Our database containing 60 million names is critical to our financial success. We believe it is the largest domestic database among media companies, and it represents 70 percent of U.S. homeowning households. We use it to precisely target subscription mailings, identify prospects for new magazines, customize advertisements, and help publishing and broadcasting clients create strategically targeted marketing campaigns.

Our editors understand American lifestyles and how they affect our areas of expertise -- decorating, cooking, gardening, building, remodeling and crafts. As a result, our readers are extremely loyal. They know our magazines and books will provide inspirational yet practical advice based on solid research and years of experience.

We're also improving our knowledge of our television viewers by conducting extensive research in each of our markets. We want to better tailor our news and other local programming to meet their needs.

We Provide Full-Service Media and Marketing Capabilities

As part of our strategy to generate new revenue and profit streams, we continue to partner with the country's most respected marketers. Publishing relationships with Nestlé, The Home Depot, Ortho^® and Metropolitan Life Insurance Company, among others, lessen our dependence on conventional advertising revenues. We've also begun to develop marketing programs with local television advertisers, using our database and publishing resources to differentiate our stations from the competition.

We sell much more than advertising. We rely on the trust and credibility we've built to reach American consumers in many ways. We truly are a full-service media and marketing company.

Our Television Stations are in Strong Growth Markets

Our television stations are located in many of the country's fastest-growing metropolitan areas. On August 24, 1998, we announced our plan to add yet another standout market to our mix by acquiring WGNX-TV, the CBS affiliate in Atlanta. This transaction, expected to close in January 1999, will give us a station in a top ten market. It will extend our U.S. household reach by 22 percent to 9.4 percent of U.S. television households, and it will position Meredith as the largest owner of CBS stations in terms of household reach other than the network itself.

Including Atlanta, our 12 television stations are located in some of the country's strongest markets. Ten of our markets are growing faster than the national average, and our group is projected to grow 95 percent faster than the United States as a whole through 2002. Our geographic diversity helps provide protection from regional economic slowdowns, and we have a strong mix of networks. With six FOX affiliates, five CBS affiliates and one NBC affiliate, we reach a broad demographic group and receive some protection from changing audience share rankings among major networks.

We Have Powerful Magazine Brands

Also contributing to our strong performance is our stable of exceptional, highly profitable magazine brands. Better Homes and Gardens is one of the country's leading brands, and it is a major contributor to our revenues and operating profit. In fact, for every dollar of revenue produced by Better Homes and Gardens magazine today, another 92 cents is generated by products and services formed under its umbrella. Country Home and Traditional Home magazines, originally created under the Better Homes and Gardens banner, have developed loyal followings, and each is a recognized expert for its style of decor.

Ladies' Home Journal magazine has been nationally honored for in-depth and reliable health information, while its articles on relationships, beauty and fashion remain popular with readers. Our niche publications such as WOOD, Golf for Women, Successful Farming and Midwest Living magazines are highly regarded by enthusiastic groups of readers.

Strategic Focus

How will we capitalize on the above factors to drive future growth? First, consider that demographic trends are working very much in our favor. The number of people ages 45 to 54 will increase 24 percent by 2008, and this same age group has historically spent the most money on home-related goods and services. We believe this demand will drive magazine and television advertising spending. Because our magazine content meets the needs of the baby boom generation, we believe we're the best positioned publisher in the industry.

Amid this favorable environment, we will continue to pursue three key growth strategies:

• Further develop our commitment to home and family publishing;

• Increase our involvement in television broadcasting; and

• Develop new revenue and profit streams consistent with our home and family heritage.

Since our last annual report, we've again demonstrated our commitment to these strategies. We acquired four television stations in the first quarter of fiscal 1998 and recently announced our intention to acquire WGNX in Atlanta. We introduced Family Money magazine and announced the September 1998 launch of MORE magazine. We added four new Better Homes and Gardens Special Interest Publications and began airing the Better Homes and Gardens television show.

In June 1998, we announced the sale of the net assets of the Better Homes and Gardens Real Estate Service to GMAC Home Services, Inc. In a separate agreement, GMAC licensed the use of the Better Homes and Gardens trademark for residential real estate marketing for a period not to exceed 10 years. The transaction closed on July 27. Divesting this business will allow us to focus our energy on our core publishing and broadcasting operations.

As we look to the future, we see many growth opportunities in the digital arena. We're pursuing electronic commerce activities such as selling subscriptions, books and magazines online, as well as hosting events such as the WOOD Show Online. In the Meredith tradition, we're approaching these opportunities in a practical, measured way. Admittedly, we don't know where they will ultimately lead us, but we do see substantial promise in terms of lower subscription acquisition costs and higher revenues due to broader interest in our products and services.

By remaining focused on our core strategies, we're committed to maintaining double-digit earnings per share growth, double-digit EBITDA growth and ROE in the high teens, at a minimum, on an ongoing basis.

Shareholder Value

Our adherence to our core strategies and the resulting strong operating performance enabled us to take steps to increase shareholder value in fiscal 1998. At its February 1998 meeting, our board of directors increased the quarterly cash dividend by 8 percent, resulting in a current annualized dividend rate of 28 cents per share. We repurchased approximately 900,000 shares of our stock in fiscal 1998. We plan to continue our buyback program, as we believe our stock is undervalued given our strong brands and our exciting growth prospects.

Executive Developments

Board of Directors

Philip A. Marineau, president and CEO North America of Pepsi-Cola Company, was elected to the board on February 2, 1998, to fill the vacancy created by the retirement of Pierson M. (Sandy) Grieve, retired chairman and CEO of Ecolab, Inc. We welcome Phil and thank Sandy for his many contributions since he joined the board in 1985.

As we review a rewarding fiscal 1998 and anticipate another successful year, we want to acknowledge the support of our customers, employees and shareholders. We look forward to working together to achieve ever-improving shareholder value.

Sincerely,

William T. Kerr,
President and Chief Executive Officer

E.T Meredith III
Chairman of the Executive Committee
of the Board of Directors